The Importance of Sustainable Green Supply Chain Management Practices

Introduction

Jason Drew once said, "people used to talk about win-win in business deals. They were naïve, and the environment always lost". This is Jason's speech about encouraging sustainable business development which he argued that the environment deserved attention. Sustainable sourcing is cost-effective, and a focus on social responsibility is critical to enhancing sustainability in the supply chain. Sustainable supply chain management can be achieved by acknowledging the role and importance of green supply chain practices. Although, the traditional methods of supply chain management do not involve the concept of the green supply chain.

Global warming and constant climate change have forced the world to come up with environmentally responsible means of manufacturing, production, and logistics. Understanding the environment on financial and the social need for supply chain sustainability through green supply chain management is the major importance to global organizations. Therefore, the green supply chain practices through the Triple Bottom Line approach are essential in the current business, and its enhancement can make the organization more environmentally in a friendly way in the future.

Green Supply Chain Practices

Purchasing specialists are often in a dilemma when it comes to cost, delivery, and quality. However, sustainable development and green supply chain management are rapidly changing this situation. In the end, green supply chain management (GSCM) will be the standard of the effective performance system. There is an important proof about the concept of green supply chains. The following studies can help in gaining a more in-depth comprehension in this regard.

Chin et al. (2015) mentioned that green supply chain management is defined as technology and method on reducing waste of limited resources, control of chemical and environmental harmful emissions of gases as well as the best use of energy for maximum productivity. The environmental issue is an opportunity to create economic value. Further research shows that the adoption and use of green supply chain management practices of manufacturing firms enhance their environmental and economic performance levels. The process, improves the overall operational performance, thereby making green supply chain management practices highly desirable among the firms today. The role of environmental sustainable supply chain practices has been positive and significant considering the market-based, operational-based and accounting-based forms of different organizations.

According to Dues, Tan & Lim, there is a close association between lean and green supply chain management practices. The authors position, green supply chain management as a topic that goes beyond the reduction of wastage. They contend that integration of lean and green supply chain management can lead to improved outputs in regards to production, finance, and operations. According to their findings, there is a causal relationship between lean, agile, resilient and green supply chain management.

Author Chin, Tat & Sulaiman highlight the significance of green supply chain management, environmental collaboration and sustainable performance of the global supply chains and affirm that green supply chain management involves the integration of environmental thinking. The internal and external organizational factors play an equally essential role in promoting green supply chain management practices. Being green is about designing and processes to minimize the waste.

The Triple Bottom Line Approach

The term Triple Bottom Line (TBL) was created and introduced in the 1990s, now it gradually began to receive increased focus and attention from the corporate business world. Essentially, the Triple Bottom Line approach advocate sustainability and organization’s social responsibility. The method mainly comprises social, environmental and financial processes as the three layers of a holistic framework. The Triple Bottom Line approach enables organizations to look at their performance in a broader context by assessing their contributions towards to social responsibility and environmental preservation.

The gist of the Triple Bottom Line approach is that organizations must focus on these three bottom lines to preserve the three Ps, including profit, people, and the planet. The strategy allows organizations to measure their financial, social and environmental performance over a given period. The social impacts of TBL are embedded in regards to people and the planet. As such, the triple bottom line approach compels organizations to focus more on ways that help in enhancing the welfare of the society as a whole.

Demonstrating adherence to Corporate social responsibility (CSR) is a good example of the social impacts of the triple bottom line. CSR measures include educational campaigns, awareness campaigns, vocational training and skills development campaigns, that uplift the overall stance of the society. The strategies can help improve the underemployment rate, and health-adjustable life-expectancy as well as establishing an outstanding brand value. From the environmental perspective, green supply chain management is what drives organizational performance through the Triple Bottom Line approach. Sustainable performance of global supply chains directly relies on the adoption of green practices. Critical considerations in integrating green supply chain management practices include careful supplier selection and evaluation, environmental collaboration and green production and process design. Ecological collaboration in the green supply chain is essential for both, the suppliers and the customers.

At the meanwhile, undertaking measures that mitigate the ecological damage, the greenhouse gases. Mitigating the use of perishable resources and excessive energy, use of alternative sources of energy and effective solid waste management practices are also critical. Additionally, the concept encourages organizations to streamline their processes in a manner that fosters sustainable and green performance. Among these procedures, green supply chain management holds a critical position. Furthermore, the Triple Bottom Line approach is similar to the balanced scorecard, because it consists of a set of basic principles, an approach holds that organizations on what they measure. Therefore, if organizations start assessing their social and environmental performance, achievement of a truly sustainable and green supply chain will become possible. For example, in the early 2000s several large-scale organizations, Tesco and Nike demonstrated corporate malpractices and were held responsible for disregarding ethical standards in their supply chain management. Nonetheless, in a desperate attempt to remain competitive and in-demand, such corporations rapidly integrated the TBL approach into their routine organizational operations to enabled them to stay committed to socially responsible and environmentally viable activities, while also generating adequate revenues as their respective business models. The strategy helped in improving the image of organizations.

On the financial side, the TBL approach paves the way for organizations to attain a mutually beneficial financial position. They adapt and implement processes, strategies and policies that promote financial gains. Financial overhaul can enhance measures, such as personal income, job growth, establishment sizes and churn, and the cost of underemployment. One of the problems associated with adopting the Triple bottom line approach is that this concept does not provide a single measure of social, environmental and financial performance.

According to Slaper and Hall (2018) the situation is attributed to the profits, which can be measured in terms of figures, however, social capital and environmental responsibility cannot be similarly quantified. The primary solution to the problem is the monetization of the three dimensions, which would provide them with a standard unit of measure. Another potential solution to avoid sustainability issues is to develop an index for these three dimensions without the ubiquitous differences in accounting methods. For instance, the innovation index coined by the Indiana Business Research Center can be utilized as a reference for the development index. The perspective is reflected in the use of three common measures, including profit, population and the plant, which are used by several organizations that acknowledge the significant importance of green supply chains and sustainable development.

Conclusion

Organizations and other entities around the world need to use sustainable green supply chain management practices in order to improve organizational operational, financial and environmental performance. The aim of green supply chain management is to reduce the waste of natural resources and to focus on recycling, reusability, reduction, and reorganization of the entire supply chain. Additionally, the concept eliminates the environmental emissions and hazardous chemicals from manufacturing enterprises. Given the research mentioned above, it is certain that integrating green supply chain practices is closely related to improving performance and productivity. Organizations implementing green supply chains tend to have higher trust among the customers, also, being ethics and social responsibility is well worth for an organization reputation. The triple bottom line approach is essential to enabling organizations to value and measure their financial, social and environmental performance.